NBN Co will spend $1.3 million on replacing outdated network technology in 700 premises in Tasmanian trial sites for the National Broadband Network (NBN).

Tasmania was the first state in Australia to receive the NBN roll-out. As such, it was treated as a pilot site for the $35.9 billion network, as NBN Co used it to work out the best technology and construction methods for the national roll-out. Installed in each of the Tasmanian premises in the initial stage of the roll-out was an NEC Ethernet network-termination unit (NTU), with a maximum download speed limited to 100 megabits per second (Mbps), while NBN Co now plans to offer speeds of 1 gigabit per second (Gbps) in the future.

NBN Co has since been using Alcatel-Lucent interfaces in premises in the mainland roll-out sites, which can support 1Gbps download speeds.

CEO Mike Quigley told a Budget Estimates hearing last night that the company will need to replace the NEC devices with the Alcatel-Lucent gear in approximately 700 premises in Tasmania, comprising of 300 in Midway Point, 150 in Scottsdale and over 200 in Smithton. This is significantly lower than the 4000 estimated in February. The company has estimated that the replacement will cost a total of $1.3 million to the taxpayer. NBN Co will finish this upgrade by the end of the year.

Telstra said in February that it will withhold offering commercial services in Tasmania until the upgrade has been completed.

"Telstra needs to wait until the technology in Tasmania is upgraded, and the NBN systems and processes that support serving our customers provide the same levels of service to all customers, no matter where they live," Telstra told ZDNet Australia at the time.

NBN Co said that customers wouldn't notice the difference between the two devices today, and that there are many other service providers to choose from in Tasmania in the meantime.

"The good news for people in these communities is that they don't need to wait for Telstra before receiving the benefits of super fast broadband. There are plenty of choices from plenty of other internet service providers that are offering very competitive NBN-enabled services right now."